Yesterday Theresa May’s spokesperson confirmed that the Prime Minister would still continue to get a deal through the House of Commons despite the setbacks seen on Monday from the speaker John Bercow.
John Bercow made the decision earlier in the week that he would not allow a third vote to take place unless there were substantial changes made to the deal, and this had weakened the pound ever so slightly at the start of the trading week.
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It does appear that Theresa May is still planning on having one last attempt at getting the deal through and has been heavily negotiating with the Democratic Unionist Party (DUP) over the past few days to try and get enough people on her side. If this does happen and MP’s do have a majority that wish to now proceed with the vote then there are steps that MP’s can take to overrule the speaker and the vote could still go ahead.
Theresa May is due to head back over to Brussels tomorrow to discuss the possible terms of a delay, it is understood in breaking news this morning that she has requested a short-term delay amidst a number of members of her party being against the delay being too long and possibly jeopardising Brexit.
According to reports on Bloomberg it is understood that the EU plan is to make allowances for an extension that will give Theresa May one last vote and one last chance to get a Brexit deal through.
The EU leaders appear to be willing to offer a short-term delay but of course it would require Theresa May to win a third vote, but this would have to alter to a longer-term delay should she lose once more, or the U.K could face the prospect of leaving the EU with no deal.
It does seem like the Prime Minister is hoping that running down the clock will test the resolve of those who are not in favour of her deal, in the hope that they will change their status to avoid being part of a Parliament that leads the country into a no deal Brexit which would likely make the economy suffer in the short term.
Michel Barnier commented yesterday that a delay would need to be clearly useful in order for it to be approved and that the EU will act in the best interest of the EU.
It is this uncertainty that appears to be holding the pound back, and I feel that should uncertainty for the U.K lift, the pound may regain some value. Having looked at various forecasts from banks such as Barclay’s and Credit Agricole the general consensus appears to be a slight gain in sterling value in the coming months, but so much of this is dependent on Brexit news so it is in reality terribly hard to predict just what could happen next. Even an hour is a long time in the current market so the key is making sure that you have everything in place should you have the requirement to exchange currency in the coming days.
Whilst it is still likely that Brexit will remain the core driver for sterling exchange rates, we do also have a fairly important economic data release out tomorrow which is the Bank of England interest rate decision. There are no expectations of any changes to interest rates however investors and speculators alike will be concentrating on any comments from Bank of England Governor Mark Carney on the economy going forward.
Governor Carney is known to be against Brexit and regularly comments on how he feels it may damage the U.K economy.
Previously when he has done this it has impacted the pound in a negative fashion so be wary of any comments in the minutes from the meeting, due to also be released at 12:45pm tomorrow.
Some positive news on the U.K economy did also break yesterday as U.K unemployment hit a 44-year low.
This did give the pound a short burst of strength but this was also overshadowed by Brexit news as the day progressed.
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